Hurd's job at Oracle prompts HP suit

SAN FRANCISCO — Hewlett-Packard is suing the chief executive it ousted last month, Mark Hurd, to stop him from taking a top job at rival Oracle.

The lawsuit, filed Tuesday in a California state court, came a day after Oracle hired Hurd as co-president to help lead the database software maker's efforts to steal business from HP. HP claims that Hurd won't be able to perform his job at Oracle without spilling HP's trade secrets and violating a confidentiality agreement.

This type of complaint isn't unusual in the technology world, nor is the confidentiality agreement that Hurd had signed as part of a severance package from HP that could top $40 million.

Technology companies often require such agreements because workers walk out the door with valuable technical information.

But the stakes are higher with Hurd than a rank-and-file employee, and the lawsuit may delay when Hurd could start his new job.

The latest lawsuit shows the growing rancor between HP and Oracle.

The companies have worked together for 25 years to make sure that their products work well together. But that relationship is straining now that Oracle, like HP, sells the computer servers that power companies' back offices. Oracle got that business through its $7.4 billion purchase of Sun Microsystems last year.

Oracle is mostly known for its database software, which many people use every day but likely don't know it, such as when they're pulling money out of a bank or booking a flight. The software helps companies organize and access their data. It essentially gives them a map to all their information, so their computers know exactly where to find things. Oracle is the world's No. 1 database software maker, and with the Sun business, Oracle is now among the world's top seller of servers, as is HP.

As HP's CEO for five years, a stint that ended after a sexual-harassment investigation, Hurd was responsible for preparing HP's strategic plans and has intimate details about HP's profit margins and special deals it has offered customers, according to HP's lawsuit.

HP also insisted that Hurd was privy to a "highly confidential" analysis of Oracle's competitiveness against HP.

"Hurd's actions are a serious threat to HP's business," HP lawyers wrote in the lawsuit, which was filed in California Superior Court for Santa Clara County.

Unless stopped, HP said, Hurd would diminish the value of HP's trade secrets, hurt customer relationships and "give Oracle a strategic advantage as to where to allocate or not allocate resources and exploit the knowledge of HP's strengths and weaknesses."

Hurd and Oracle declined to comment.

These types of cases often end up with a court ordering disputed executives to stay away from certain parts of their new employers' businesses. Hurd's deep involvement with all aspects of HP's businesses could complicate his case.

Still, the lawsuit may only delay Oracle's ability to put Hurd to work.

"In the end, it is likely going to be difficult for HP to prevail," said Kenneth Freeman, dean of Boston University's School of Management. "It's usually a very difficult area to enforce."

HP itself was on the other end of this type of case last year, after it hired David Donatelli, a veteran of the data-storage industry, from EMC. HP was temporarily barred from letting Donatelli start work as an executive vice president because of a lawsuit by EMC. A court later ruled that Donatelli could work for HP, but under certain restrictions that split up some of his responsibilities.

Technology companies including HP, Apple, Microsoft, IBM and Google have clashed over hiring in the past, with one side trying to bar managers privy to sensitive information from moving to a rival. Some lawsuits are settled out of court.

Last year, Apple and IBM resolved a legal disagreement over Apple's decision to hire IBM executive Mark Papermaster as engineering chief. Under the resolution, Papermaster agreed not to use or disclose confidential IBM information.

In 2007 HP paid printer maker Lexmark $525,000 over HP's hiring Bruce Dahlgren to oversee printer sales. Under the settlement, Dahlgren was barred from recruiting Lexmark employees and from interfering with Lexmark's customer relationships for 1 ½ years.

Two years earlier, Google and Microsoft settled a dispute over Google's hiring of former Microsoft Vice President Kai-Fu Lee to run a research facility in China.

Material from Bloomberg News is used in this report.